Letter T

T

Taylor, Frederick W (1856-1915) – An American engineer who invented work study and developed the scientific approach to management. Taylor advocated division of labor, specialized tools, piece-rate payments and tighter management control for improving productivity. Taylor’s management principles had considerable impact in America, the most visible being the mass production system at Ford.

While Taylor’s system began as an attempt to develop the perfect pay-for-performance formula, it quickly came to encompass broader issues of “work” and “control.” Taylor realized the need for standardizing work, tools, and maintenance techniques to improve productivity. Standardization, in turn, demanded a level of control over work that had never been attempted before.

Taylor began by examining not just how long a particular task took to complete but how long it should take. Taylor used a stopwatch and recorded his observations in a notebook. He broke each job and work process down into discrete parts, studying and timing the movements of men and machines.

Taylor realized that while two machinists might be working on entirely different products, such as a railroad tire and an engine part, the “elementary” steps in the job were the same. The secret of improving productivity was to improve and standardize the elementary steps and apply them to a wide range of tasks. By breaking each job down into its component parts, Taylor determined, how production machinery could be modified and individual operations improved or eliminated.

Taylor was eager to learn from the best of the skilled workmen, especially machinists, and was prepared to promote them. But those who were left to operate on the factory floor were stripped of their individual artistry. By deskilling the foremen’s jobs, no single foreman needed to understand the entire range of supervisory work. Taylor also introduced an elaborate planning department that was responsible for coordinating the work of the foreman, designing work flow and conducting cost-accounting reviews.

The main limitation of Taylorism was that it failed to see a factory as a social system. Today, Taylorism has fallen out of fashion. Knowledge workers like to be left free and do not want to be micro managed as Taylorism would advocate.

Technology Risk: Technological changes can wreak havoc on industries. In making decisions regarding technological changes, companies err in two ways. They either commit themselves to a new technology too fast and burn their fingers or wait and watch while another company comes up with a new technology that puts them out of business. The issue of when and how to react to the emergence of a new technology is a matter of judgment. However, this judgment need not be based purely on intuition. By doing a systematic structured analysis of developments in the technological environment and putting in place the necessary organizational mechanisms, technology risk can be considerably reduced.

How can managers identify the emergence of a disruptive technology? Clayton Christensen’s research reveals that disruptive technologies are often developed privately by engineers working for established firms. When such technologies are presented to customers, they get a lukewarm response. So, established companies do not give much importance to these technologies. The frustrated engineers consequently join start-ups, who are prepared to look for new customers. Companies must take note when talented scientists and researchers leave them to join start-ups. Often, they do so, to work in an environment where their innovative ideas are taken more seriously.

Companies must also learn to assess the impact of a new technology . The steam engine was developed for pumping water out of flooded mines. It was years before a range of applications was developed in industries and for transportation. Marconi, the inventor of the radio felt that it would mainly be used between two points where communication by wire was impossible. So he targeted shipping companies, the navy and newspapers. Marconi did not even consider the possibility of communicating to several people at the same time. It was left to David Sarnoff, an uneducated Russian who migrated to the US to understand the technology’s potential in broadcasting news and entertainment programs. Bell Labs did not think it necessary to apply for a patent covering the use of laser in telecommunications. Only later did it realize what a powerful combination laser and fiber optics made. Thomas Watson Sr. looked at the computer only as a tool for rapid scientific and data processing calculations. Computers are today mostly used in commercial applications.

Very often, new technologies tend to be primitive when first developed. The full potential of a new technology is sometimes recognized only decades later. Even though the telephone has been around for more than 100 years, applications like voice mail and data transfer have emerged only recently. Aspirin, one of the world’s most widely used drugs, has been around for 100 years, but its efficacy in reducing the incidence of heart attack, due to its blood thinning properties, was discovered much later. So, while evaluating new technologies, a longer time horizon must be used, than for existing technologies.

To better appreciate the impact of a new technology, established companies would do well to go beyond their existing customer base and start talking to potential users whom they have not seriously targeted till now. Conventional planning, budgeting and investment appraisal processes can be counter-productive when applied to disruptive technologies. Creative ideas cannot be filtered through traditional financial screens. Companies must be prepared to jump into the fray and go through a process of learning, instead of waiting for the numbers to start looking good, when the technology gains acceptance.

Companies must also note that technological performance often overshoots market requirements. Consequently, today’s under-performing technology may meet the needs of customers tomorrow. On the other hand, technologies which perform satisfactorily today, may over-perform tomorrow. Customers may not be willing to pay for this over-performance. According to Michael Porter, the basic aim of differentiation is to provide something extra that the customers value and charge a premium for it. If customers do not value the additional features, differentiation as a competitive strategy will not be effective. So, if a new technology fares relatively low on some of the currently accepted attributes, but scores heavily on a new attribute, it has the potential to unseat the older technology. Thus, in the disk drive industry, capacity became less important, and factors such as physical size and reliability became the more important attributes.

To understand and work with new technologies, the critical requirement is a new mindset. Established players are not short of financial muscle or talented manpower. But, they have a mindset problem. On the other hand, the successful innovators often have less resources but the right mindset. They worry less about what the technology can do and instead, look for markets which will be happy with the current performance levels.

One way to encourage a new mindset is to create small empowered teams, outside the main organization and allow them to try new technologies. Since entrenched processes and values stand in the way of change, a separate organization is a more practical arrangement than grandiose attempts to change the entire company’s culture.
(See Innovator’s Dilemma, S Curve in Technology Evolution)

Threat of Substitutes: Industries are usually defined in terms of the products or services they provide. However, if we define industries from the buyer’s point of view, we might come up with a quite different set of firms, who deal in different products, but who meet the same type of buyer needs. Substitute products are alternative ways of meeting buyer needs. Substitutes lie outside the traditional industry definition adopted by the firm. They can be viewed in two ways. Substitutes-in-kind are products that look alike and represent the same application of a distinct technology to the provision of a distinct set of customer functions. Substitutes-in-use are products that have shared functionality based on the customer’s perceptions of all the ways in which their needs can be satisfied in a given usage or application situation. The attractiveness of a substitute product depends on its initial price, customer switching costs, post purchase costs of operation and the additional benefits the customer perceives and values.
(See Porter’s Five Forces Model)
Tipping Point: The phrase tipping point coined by Morton Grodzins, is a sociological term that refers to that dramatic moment when something unique becomes common. In the early 1960s, Grodzins discovered that many white families in the US would remain in a neighborhood so long as the comparative number of black families remained very small. But beyond a point, the remaining white families would move out en masse in a process known as white flight. He called that moment the "tipping point." The idea was expanded by Nobel Prize-winner Thomas Schelling in 1972. More recently, Malcom Gladwell has written a best selling book on this theme.
Around the principle of Tipping Point, management scholars, W Chan Kim and Renee Mauborgne, have developed the concept of Tipping point leadership. In every company, there are people, acts, and activities that exercise a disproportionate influence on performance. Launching a major strategic initiative is not about launching huge initiatives, which demand heavy investments in time and resources. Rather, it is about conserving resources and cutting time by identifying and leveraging the factors of disproportionate influence.

Instead of mobilizing more resources, tipping point leaders attempt to multiply the value of the resources they have. Instead of diffusing change efforts widely, tipping point leaders focus on kingpins, fishbowl management, and atomization. Kingpins are the key influencers in the organization. These are well respected and persuasive leaders who have an ability to unlock or block access to key resources. Kingpins can be motivated into action by focusing attention on their actions in a repeated and highly visible way. This is what Chan Kim and Renee Mauborgne refer to as fishbowl management, where kingpins' actions become as transparent as fish in a bowl of water. This way, the stakes of inaction are greatly raised. Finally, there is atomization which relates to the framing of the strategic challenge. People must believe that the strategic challenge is attainable.

To overcome resistance to change, tipping point leaders focus on three kinds of people. Angels are those who have the most to gain from the strategic shift. Devils are those who have the most to lose from it. A consigliere is a politically adept but highly respected insider who knows in advance all the potential stumbling blocks, including who will support and also who will block the new initiative.
(See Chan Kim, Renee Mauborgne)

Total Quality Management (TQM): TQM is an integrated, cross functional approach that attempts to facilitate continuous improvement in the quality of goods and services. TQM is a systems approach that considers interactions between various subsystems of an organization including design, planning, production, distribution, field service and various management processes. The TQM philosophy believes that there is scope for continuous improvement in any product, process or service. A basic notion of TQM is that quality is essential in all functions, not just manufacturing. TQM also emphasizes satisfaction of customers, both internal and external. Implementing TQM involves a cultural shift and change in behavior of employees.
(See Deming, William Edwards)